Bitcoin's price dropped below $77,000 for the first time since May 1, influenced by rising Treasury yields and geopolitical tensions.
Bitcoin's price fell to approximately $76,580 on May 18, its lowest level since May 1, triggering declines in altcoin values as well.
The Fear and Greed Index currently registers at 27, indicating market apprehension. Analysts attribute Bitcoin's downturn to increasing U.S. Treasury yields, a stronger dollar, and heightened geopolitical tensions, particularly regarding Iran.
In a recent statement, U.S. President Donald Trump warned of potential military actions against Iran, contributing to rising oil prices, which saw Brent crude reaching $111 and WTI hitting $107.7. Investors are concerned that these high oil prices could lead to tighter monetary policy from the Federal Reserve. Jeff May, COO of BTSE, noted that the market is adjusting to the risk of interest rate hikes aimed at curbing inflation.
This uncertainty has affected cryptocurrency ETFs, with $1 billion withdrawn between May 13 and May 17, breaking a six-week inflow streak. Min Jun from Presto Research highlighted that institutional investors are scaling back on risk assets while they await key economic data. The Bitrue Research Institute described the current market trend as a "healthy correction," noting a support level around $74,000.
The sharp price movement resulted in significant liquidations, with nearly $500 million in long positions closed within a mere 15 minutes during the Asian trading session, totaling over $606 million in forced closures.
According to BTC Markets analyst Rachel Lucas, the correction reflects macroeconomic factors influencing risk appetite, with rising oil prices and bond yields coinciding with stock market declines. Demand for put options with a $77,500 strike price has surged on the Deribit exchange, as Sean McNulty from FalconX mentioned that the drop triggered stop-loss orders set by investors earlier.
Retail Investor Activity Declines
Data from an analyst known as Darkfost reveals that inflows of Bitcoin from retail investors to Binance have reached historic lows. The average monthly inflow from these small players, defined as those holding less than 1 BTC, is currently just 314 BTC, a stark contrast to previous cycles where inflows peaked at 5,400 BTC in 2018 and 2,600 BTC in 2021.
🗞️ Retail activity hits historic lows as BTC inflows collapse
It is often said that the Bitcoin market is constantly evolving. This is particularly evident in the behavior of retail investors.
Darkfost observed that retail investors seem to be "disappearing from observable on-chain activity," suggesting a shift in market dynamics where some may have exited the market or are opting for spot ETFs instead of direct Bitcoin ownership.
Long-Term Holders Increase Their Holdings
The supply of Bitcoin held by long-term holders (LTHs) has risen to 15.26 million BTC, the highest level since August 2024, with an increase of about 316,000 BTC over the past month. This marks a turnaround from late November, when LTH wallets experienced a net outflow of 650,000 BTC.
📈 The supply held by Long Term Holders (LTHs) continues to increase as investors keep holding their BTC. We are back to 15.26 million BTC held by these investors.
Darkfost noted that investors who purchased Bitcoin around six months ago are not rushing to cash in on profits. He anticipates a significant increase in LTH supply around May 23, when 800,000 BTC that moved via Coinbase will officially transition to the long-term holder category. This follows a recent drop in Bitcoin's price below $80,000 amid rising U.S. inflation concerns.
